Families in California's most vulnerable communities face the threat of losing their homes due to the lack of a will or unclear debts, putting themselves at risk to foreclosure when pandemic-era mortgage relief runs out before you even know it exists.
Joe Jaramillo, senior attorney for HERA, a statewide nonprofit housing advocacy and legal services organization, says the biggest threats homeowners face are keeping their homes when a parent or grandparent dies and ending mortgages that come with unexpected bills and threats of foreclosure.
During a briefing held by Ethnic Media ServicesThe lawyer pointed out that if the owner of the house dies, the property is put at risk by not having a will, so the relatives have to go through an arduous and long legal process to inherit it while the property taxes, insurance and mortgages accumulate with an unclear responsibility of who should pay.
Lawyer Jaramillo said Black and Latino households consistently report higher risks of foreclosure due to this issue.
On the other hand, Property Assessed Clean Energy (PACE), which allows financing of clean energy home improvements such as solar power, provides loans that require no down payment, but are collected by adding large sums to property taxes. It seems like a good opportunity, but this has put thousands of African-American homeowners in California at risk of foreclosure.
“It sounds good in theory,” Jaramillo said, “but many sellers and contractors target low-income households and misrepresent costs or install upgrades that don’t work or aren’t connected, such as solar panels.”
A third factor, he continued, is zombie mortgages: “second loans often taken out at the same time as a larger first-lien mortgage, split up to allow borrowers to avoid large down payments and apply part of the second to the down payment,” Joe Jaramillo concluded.
In California, homeowners have been able to overcome these threats through the Mortgage Relief Program, said Rebecca Franklin, president of the California Housing Finance Agency (CalHFA).
Since it was launched at the federal level in December 2021, more than 23,000 Californians have kept their homes thanks to the program, which offers grants of up to $80,000 per home for a total of nearly $650 million distributed so far.
However, with the one-time fund projected to be exhausted by 2025 or likely sooner, he urged homeowners to seize this opportunity and not let it pass them by.
Unlike the Great Recession relief programs, this one “is a grant that doesn’t have to be paid back,” Franklin said. “Often when homeowners hear about our program, they don’t believe it.”
“Getting $80,000 that doesn’t have to be paid back is too good to be true. This isn’t real, that’s what they think. But it is real,” he added, while reminding that homeowners can contact CalHFA to request housing counselors or legal services that fit their needs.
Johanna Torres, program coordinator for California Rural Legal Services, explained that even when mortgage subsidies and other assistance are available, many mortgage servicers fail to inform homeowners, leaving many vulnerable to untold outstanding debt.
Although laws such as the Real Estate Settlement Procedures Act exist and require most mortgage companies to provide periodic statements to the buyer, this becomes a problem as lenders are abusive in not providing the correct information, Jaramillo added when speaking about the problems faced by homeowners.
HERA attorney Mary Day said that as foreclosure rates return to pre-pandemic levels, grants like California Mortgage Relief are critical to protecting families from losing their homes, something that has taken them years to pay for and obtain, leaving families homeless and vulnerable.
His client, Danny Bishop, shared his own experience of saving his Richmond home from foreclosure caused by bureaucratic confusion and deteriorating family health, something many citizens face.
“They never told me why they charged me so much,” Bishop says. “They told me to keep cleaning up the backyard, that I was doing a ‘good job,’ and one day they charged me tens of thousands.”
Attorney Mary Day said that even though the tax code gives them discretion to grant tax credits, after six months, many do not do so, and that is why many families are forced to face foreclosure, with bureaucracy making things more difficult.
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